Connect with us

Blockchain

This Week in Crypto

Crypto markets had a wild ride last week with many traders opting to stay away from the screens as exchanges struggled with the massive volatility, liquidations and volume.

Republished by Plato

Published

on

By Guest Contributor: Daniel Gupta, Kenetic Capital

Fear gripped the global markets last week and unless your investment portfolio consisted heavily of USD (kudos to Warren Buffet), then nothing really was immune to the perfect storm of global uncertainty around the COVID-19 outbreak which was declared a pandemic by the World Health Organization on the 11th March.

Crypto markets had a wild ride last week with many traders opting to stay away from the screens as exchanges struggled with the massive volatility, liquidations and volume — we note that Coinbase saw record volumes on Thursday with over $1.5bn in value traded. With massive volatility, inevitably many traders would have lost fortunes and Twitter was indeed eerily quiet once the dust settled at the end of the week. We can confidently assume that hundreds of derivative trading accounts were liquidated as Bitcoin precipitously fell from $8,000 to $3,800 over the course of Thursday.

COVID -19 is a major black swan event — defined by the fact that no one anticipated it or still really understands the possible long-term impact to humanity and the world economy. As history has shown, the worst enemy to all markets is uncertainty and the sheer scale of the uncertainty surrounding this global pandemic, combined with the oil war is excruciatingly clear to see everywhere.

Crypto prices started weakening last weekend as wallets associated with the PlusToken ponzi started to move 13,000 BTC to coinjoin mixers, commencing mass liquidations and raising ~$100M in fraudulent cash. How exchanges are still facilitating this is absolutely staggering. What is the point of KYC and AML?! The timing of the liquidations coincided with the broader market chaos and panicked sell offs, with the hope this distraction would mask the activity of these criminals whilst focus is elsewhere. The good news is that there doesn’t appear to be much more PlusToken BTC or ETH inventory to be sold and therefore alleviating, once and for all, this frustrating and significant sell pressure. Follow @egroBTC for quantitative analysis of these liquidations and wallet movements.

Bitcoin’s massive price drop last week was the 3rd largest daily price decline in its history and triggered a cascade of liquidations across derivative exchanges. These liquidations, led by BitMEX, was nothing short of mind-blowing. In traditional markets such large moves can trigger ‘circuit breakers’ which temporarily halt trading and allow order books to be refilled and reduce panic in the market. This actually happened 3 times last week during trading of the S&P and allowed a more ‘orderly chaos’ to play out, ultimately protecting market participants and adding structure to the market. No such thing in crypto.

Thursday saw Bitcoin’s price plummet and subsequently the liquidation of hundreds of long positions resulting in orderbooks evaporating as buyers pulled out of any significant bid support. This is where circuit breakers in traditional markets are useful, as they allow the market to pause for breath which in turn allows buyers and sellers, who withdraw orders due to the volatility, to come back in to the order books. Thankfully BitMEX, and many other derivative exchanges, hold sizable ‘’insurance funds’’ that can absorb the liquidations in the absence of natural buyers to take over the positions. Sadly, for many, these aggressive down moves would have cleaned out trading accounts.

Looking ahead, it is hard to see a more terrifying and anxious week in crypto, let alone global markets. However, we are firmly in black swan territory and not even the best epidemiological, political or economic minds can say, with certainty, how this will play out.

One thing is for sure, Bitcoin doesn’t care about virus’s, oil or fiscal stimuli. It will just keep producing block after block and allow anyone to interact with the blockchain and move value from person to person without question or complaint. As the global financial system stutters and falters, demanding massive liquidity to keep its thirsty apparatus from grinding to a halt, it’s reassuring to know that Bitcoin doesn’t need any intervention to keep going. Bitcoin is the tortoise…slowing plodding along, reliable and consistent but new to this financial race. The modern financial system is a pumped-up, steroid using hare that must take its cyclical fix of performance enhancing stimulus to keep its legs running at an ever-increasing pace.

Whatever it takes…

So, what now? Trump’s precious stock market is looking decidedly shaky and the debt laden US corporations will soon need liquidity as a result of massive disruptions to the US economy. The next Federal Open Market Committee (FOMC) meeting is coming up next week however they decided to move early and cut rates to zero over the weekend.

“I’m not happy with the Fed because I think they’re following not leading, and we should be leading,”

“I have the right to remove him.’’ Referring to Fed Chair, Jerome Powell

“I also have the right to put him in a regular position and put someone else in charge, and I haven’t made any decisions on that.”

Donald Trump

As we discussed a few weeklies back, the US repo market came under alarming stress in Q4 last year and USD shortage caused lending to dry up and repo rates to skyrocket to near 10%. The Fed simply cannot allow the repo markets to fail otherwise the world economy that is built on top of it will collapse. There is obviously much more nuance to the problem but the stakes are massive should the repo engine stop firing. Last week the Fed offered up almost unlimited short-term liquidity to the repo market by promising over $5 trillion USD in 1- and 3-month loans should the market need it. As one commentator so eloquently put it…

’’The Fed just brought an aircraft carrier to a knife fight’’

Gennadiy Goldberg of TD Securities

This coming week will see if the Fed are prepared to broaden the asset purchasing and deploy real QE. As we expected last week, the liquidity faucets are opening and the world’s central bankers, via various means, will print fiat currency until the current problems are inflated away — hopefully. Will we see the Japanification of the US economy as the liquidity problems start to stretch into corporate America? Whatever happens, mass stimulus is coming, hold on to your hats.

Where to hide?

With huge devaluation about to happen (again), what should investors do?

For some, Bitcoin has failed in its test as a safe haven asset or gold 2.0. It has lost massive value in the face of global panic. So, if it’s not a safe haven asset or gold 2.0 then what is it?

Due to Bitcoin’s relatively young age, this is its first real test in a global macro shock. If the store of value / gold 2.0 narrative is to be believed then a significant draw down in price during the initial stages of a recession can be expected. The chart below shows gold suffering a ~34% draw down during the 2008 crises before flipping to its ‘’inflation hedge’’ store of value use case as central banks flooded the world with QE and printed the world out of crises via expanding the money supply. What this chart shows is a lag between the impact of a market event and the market’s realization of its need to protect purchasing power during mass fiat devaluation via QE.

It would be foolish to say the exact same thing will happen again this time but if Bitcoin is to do what it was designed to do then the macro landscape could not be better for the price of Bitcoin (and gold) to shock and amaze as investor seek shelter when panic subsides and QE starts flowing.

Source: https://www.fintechconnect.com/blockchain/articles/this-week-in-crypto

Blockchain

Aave hits record $288 high as demand for flash loans and staking increases

Republished by Plato

Published

on

Aave (AAVE) price has been on an absolute tear for weeks and today the DeFi-token rallied to a new all-time high at $288.90. 

The decentralized finance protocol is one of the most popular in the market and the recent rally in the DeFi sector is one of the driving forces behind AAVE’s rally.

AAVE/USDT 4-hour chart. Source: TradingView

At the start of 2021, AAVE price was trading at $83 and the recent rally appears to have bolstered the protocol’s surging total value locked, increasing buy volume on spot and derivatives exchanges and the continued development of Aave’s lending platform and flash loan issuance.

TVL soars to a new high

Data from DeFi Pulse shows that Aave’s TVL rose from $2.03 billion on Jan. 1 and as (BTC) and Ether (ETH) price went parabolic Aave’s TVL also surged.

Total value locked on AAVE. Source: DeFi Pulse

Currently, Aave’s TVL sits at a new all-time high of $3.75 billion, making the platform the second-largest DeFi platform by TVL behind Maker (MKR).

The steady addition of new tokens to the lending and borrowing protocol increases the likelihood that its TVL will continue to rise and help AAVE retain its standing as one of the top DeFi projects in the cryptocurrency space.

Staking drives demand for AAVE token

AAVE’s trading volume also surged at the beginning of 2021, increasing from $200 million on Jan. 3 to a high of $928 million on Jan. 16.

AAVE price vs. Reported trading volume. Source: TheTIE

As AAVE price reached a new high, it’s 24-hour trading volume notched a record $1.06 billion. This volume surge is partially driven by investors acquiring more tokens for staking, with 26.8% of the total supply of AAVE currently staked on the platform earning an APY of 6.1%

Flash loans attract investors

Another reason for AAVE’s recent surge is the growth of its flash loans.

Flash loans allow cryptocurrency holders to collatoralize their portfolio to fund other purchases or new crypto purchases. The loans also help investors utilize the value in their tokens without the need to sell see them and create a taxable event.

Since launching flash loans less than 12 months ago, more than $1.7 billion have been issued and it’s expected that this figure will increse as the crypto bull market progresses.

Total flash loan issuance to date on AAVE. Source: Messari

As can be seen in the chart above, the most dominant token requested for flash loans is the DAI stablecoin, followed by USDC and ETH. Data from Messari shows that Aave issued $25 million in loans in the first half of 2020, $500 million in Q3, and nearly $1 billion in Q4, including $450 million in December.

The expansion of the flash loan concept will likely attract more users to Aave, especially since they can be used for arbitrage opportunities between DEXs, collateral swaps, self-liquidations and a variety of other applications within the DeFi sector.

Source: https://cointelegraph.com/news/aave-hits-record-288-high-as-demand-for-flash-loans-and-staking-increases

Continue Reading

Blockchain

Blockchain-based-video-game

Republished by Plato

Published

on

Ethereum and the broader cryptocurrency market have seen mixed price action over the past few days and weeks. Ethereum Price is Surging Despite the selling pressure it has experienced at $1,200, ETH beat all odds and surged beyond $1,400, recording a new all-time high at $1,423.38.  At press time, the…

Source: https://btcmanager.com/Blockchain-based%20video%20game%20community%20and%20development%20platform,%20Enjin%20(ENJ)%20witnesses%20the%20launch%20of%20the%20highly-anticipated%20dark%20sci-fi%20action-adventure%20game,%20Age%20of%20Rust./

Continue Reading

Blockchain

Cryptocurrency makes World Economic Forum’s Davos Agenda

Republished by Plato

Published

on

The World Economic Forum’s upcoming Davos Agenda will feature two separate sessions on cryptocurrency, offering another compelling sign that digital assets have permeated mainstream consciousness. 

The sessions, titled Resetting Digital Currencies, will be held on Monday and Thursday. The first session will feature five public speakers, including Bank of England Governor Andrew Bailey and Hikmet Ersek, president and CEO of Western Union.

Thursday’s group features four speakers, including Tharman Shanmugaratnam, a senior minister for the government of Singapore, and Zhu Min, chairman of the Beijing-based National Institute of Financial Research.

“COVID-19 has accelerated the long-term shift from cash,” reads the prospectus for both sessions. “Meanwhile, central bank digital currencies are emerging, potentially transforming how people use money worldwide.”

It continues:

“What policies, practices and partnerships are needed to leverage the opportunities posed by the rise of digital currencies?”

Davos Agenda is a five-day summit featuring some of the world’s leading figures in finance and government. The cryptocurrency series falls under the summit’s “Fairer Economies” theme. Other themes include “Tech for Good,” “How to Save the Planet” and “Healthy Futures.”

The World Economic Forum is devoting more resources to understanding blockchain technology and cryptocurrency. The Geneva-based organization has even created a cryptocurrency working group, which only last month published its inaugural review focusing on the various use cases for digital assets “beyond price and speculation.”

The Forum’s research has cited blockchain technology as a key driver of “sustainable digital finance.” Blockchain and smart contract capability, the Forum’s researchers argue, can unlock “hidden values of legacy digital systems.”

Central bank digital currencies, or CBDCs, are one area of research the Forum has delved into over the past 18 months. In Jan 2020, the Forum announced it had developed a framework to help banks “evaluate, design and potentially deploy CBDC.” The framework was developed in conjunction with over 40 central banks, financial institutions and academic researchers.

Source: https://cointelegraph.com/news/cryptocurrency-makes-world-economic-forum-s-davos-agenda

Continue Reading
Blockchain4 days ago

Ethereum Price Can Skyrocket to $10,500 According to Fundstrat

Blockchain4 days ago

TradingView Launches ‘Bitcoin Timeline’ to Show BTC Price Changes With Events

Blockchain5 days ago

Tether’s General Counsel: iFinex v. NYAG Case Continues with a Court Meeting in 30 Days

Blockchain5 days ago

2020 Crypto-In-Review: The Year of The ₿ull

Blockchain5 days ago

Crypto exchange Bitpanda opens pre-orders for Visa debit card

Blockchain3 days ago

Litecoin, Dash, FTX Token Price Analysis: 21 January

Blockchain5 days ago

Bitcoin And Tesla Stock The Biggest Market Bubbles According to a Deutsche Bank Survey

Blockchain5 days ago

The Brilliant Minds Behind the BTC Ultimatum Project, and Their New CEO, Eric Ma

Blockchain5 days ago

Rick and Morty crypto art sells for $150,000 on Gemini-owned platform

Blockchain5 days ago

Privacy Coin Firo, Formerly Known as Zcoin, Suffering a 51% Attack

Blockchain5 days ago

Bitcoin Price Analysis: 20 January

Blockchain5 days ago

Palit GeForce RTX 3070 GameRock Ethereum Mining Rig

Blockchain5 days ago

Digital euro to face review by 2 institutions, before possible launch in mid-2021

Blockchain5 days ago

Treasury Secretary nominee Janet Yellen warns of crypto crime

Blockchain5 days ago

Freeliquid: Next Generation DeFi loan platform

Blockchain5 days ago

Too fast, too furious: Some major altcoins failed to match Bitcoin’s rally

Blockchain5 days ago

Uniswap on the path to unlock $1BN in daily trade volume

Blockchain3 days ago

Bitcoin is an Unreliable Hedge During Market Upheavals: JP Morgan Analysts

Blockchain3 days ago

This early investor just sold his Ethereum stash he hodled for five years

Blockchain5 days ago

CBDC: Bank of France reveals interbank settlement testing results

Trending